MCQs for JAIIB Preparations | Fixed Income Markets – Debt and Bond Markets | Quiz 1

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Fixed Income Markets – Debt and Bond Markets is the Thirty Second Unit (Unit 32) under Module D: Financial Products and Services of Paper – I (Indian Economy & Indian Financial System)

Practice MCQ Question and Answer – Fixed Income Markets – Debt and Bond Markets

Quiz 1

1. Which of the following is the primary benefit of a deep and liquid government securities market in a country ?

  1. It increases the money supply.
  2. It helps in determining risk-free interest rates.
  3. It decreases inflation rates.
  4. It regulates foreign exchange markets.




….
Answer is (b)
It helps in determining risk-free interest rates.

2. What does a deep and liquid government securities market provide to the public debt manager ?

  1. Flexibility in managing borrowing obligations
  2. Reduced tax revenues
  3. Increased foreign reserves
  4. Improved inflation control




….
Answer is (a)
Flexibility in managing borrowing obligations

3. What types of securities are included in the government securities market ?





….
Answer is (d)
Central Government Securities, Treasury Bills, and State Development Loans

4. Why are government securities issued ?





….
Answer is (c)
To finance fiscal deficits and manage temporary cash mismatches

5. Which of the following entities are allowed to invest in government securities ?

  1. Banks
  2. Foreign Institutional Investors
  3. State Governments
  4. Mutual Funds




….
Answer is (d)
Banks, Foreign Institutional Investors, State Governments and Mutual Funds

6. The central government faces a temporary cash mismatch for a period of 6 months. What type of instrument is most appropriate for this need ?

  1. Treasury Bills
  2. Central Government Securities
  3. State Development Loans
  4. Public Sector Bonds




….
Answer is (a)
Treasury Bills

7. A bank wants to meet statutory liquidity ratio (SLR) requirements. Which of the following instruments will it invest in ?

  1. Corporate Bonds
  2. Treasury Bills
  3. Central Government Securities
  4. State Development Loans




….
Answer is (c)
Treasury Bills and Central Government Securities

8. Which of the following markets benefits directly from price discovery due to risk-free interest rates set by the government securities market ?





….
Answer is (d)
Money Market Instruments and Corporate Bonds

9. Which of the following risks is minimized by the government securities market in terms of public debt ?





….
Answer is (b)
Rollover risk

10. Match the following elements with their correct functions:

ElementFunctions
A.Government Securities Market1.Manages borrowing obligations
B.Public Debt Manager2.Determines risk-free interest rates
C.Money Market Instruments3.Receives price discovery from risk-free rates
D.Rollover Risk4.Minimized through proper debt management




….
Answer is (d)


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Quiz Numbers

1

Read More: MCQ Type Questions and Answers from Paper – I (Indian Economy & Indian Financial System)

Module A: Indian Economic Architecture

  • An overview of Indian Economy
  • Sectors of the Indian Economy
  • Economic Planning in India & NITI Aayog
  • Role of Priority Sector and MSME in the Indian Economy
  • Infrastructure including Social Infrastructure
  • Globalisation – Impact on India
  • Economic Reforms
  • Foreign Trade Policy, Foreign Investments and Economic Development
  • International Economic Organizations (World Bank, IMF, etc.)
  • Climate change, Sustainable Development Goals (SDGs)
  • Issues facing Indian Economy

Module B – Economic Concepts Related to Banking

  • Fundamentals of Economics, Microeconomics, Macroeconomics and Types of Economies
  • Supply and Demand
  • Money Supply and Inflation
  • Theories of Interest
  • Business Cycles
  • Monetary Policy and Fiscal Policy
  • System of National Accounts and GDP Concepts
  • Union Budget

Module C – Indian Financial Architecture

  • Indian Financial System – An Overview
  • Indian Banking Structure
  • Banking Laws – Reserve Bank of India Act, 1934 & Banking Regulation Act, 1949
  • Development Financial Institutions
  • Micro Finance Institutions
  • Non-Banking Financial Companies (NBFCs)
  • Insurance Companies
  • Indian Financial System – Regulators and Their Roles
  • Reforms & Developments in the Banking sector

Module D – Financial Products and Services

  • Financial Markets
  • Money Markets
  • Capital Markets and Stock Exchanges
  • Fixed Income Markets – Debt and Bond Markets
  • Foreign Exchange Markets
  • Interconnection of Markets and Market Dynamics
  • Merchant Banking Services
  • Derivatives Market
  • Factoring, Forfaiting and Trade Receivables Discounting System (TReDS)
  • Venture Capital
  • Lease Finance and Hire Purchase
  • Credit Rating and Credit Scoring
  • Mutual Funds
  • Insurance Products
  • Pension Products
  • Para Banking and Financial Services Provided by Banks
  • Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs)